This could be fixed easily
1. Close Firefox
2. Locate the file downloads.rdf which should be somewhere along these lines:
C:\Documents and Settings\YOUR_OWN_USERNAME\Application Data\Mozilla\Firefox\Profiles\SOME_RANDO...
3. Rename downloads.rdf to xdownloads.rdf
4. Start Firefox
Firefox should create a new downloads.rdf and you should be able to save your files again.